Vinod was a sales executive in a large MNC and he was happy with his salary. But after his twins were born, he realised his earnings may not be enough to support their education costs. He knew he needed to plan for the long term and invest for their future. So he bought couple of insurance plan for child which not only provided him with a life cover, it also secured the future of both his kids.
An insurance plan for child or a child insurance plan as it is commonly called is an essential financial product and is absolutely worth it. Take a look at this article to know how you and your family can benefit from such a plan.
Understanding a child plan
What exactly is a child insurance plan? It is a form of money back life insurance. Here, the sum assured (maturity benefit) is broken up in parts and paid in pre-decided instalments. You can choose the intervals at which the money is paid back. For example, you can ask for a payout when your child starts school, another one when he starts college and the final one at the time of him getting married. The premiums are paid throughout the tenure of the policy. So you can build up a healthy corpus for your kids at a slow pace, without having to strain your own finances too much.
The plan also offers a life cover. So if you die within the policy period, your beneficiary gets a death benefit.
Reasons why a child plan is totally worth it
Let us take a look at the reasons that make the insurance plan for children a must have in today's day and age:
- Life cover for the parent: Life, as we all know, is unpredictable. You may take all the precautions and stay safe, but an accident or malignant illness can quickly take your life away. To ensure your children are not financially affected by such an unfortunate event, you must buy a child plan. The plan will continue to be in force and the payouts will happen even after you die. Your nominees will also receive a death benefit to deal with the immediate expenses post your demise. This will help your family sort out the financial issues while dealing with the emotional loss.
- Works as a great backup: An MBA course from a good Indian university costs about Rs 2 lakhs ten years ago. Today, the same course costs close to Rs 10 lakhs and in another fifteen years it may well cost close to Rs 20 lakhs! Buying an insurance plan for child therefore, makes sense as you can back up the financial requirements that come with your children's education. Your salary alone may not be sufficient, so the additional support of a child plan is vital.
- Different investment options: A child plan allows you to combine the elements of insurance and investment. A part of the money you invest safely gets locked into a life fund. Another part is invested and fetches you returns. If you are a conservative investor and do not want to risk your money, you can opt for an endowment plan where the returns are almost fixed. If however, you are a bit of a risk taker and want the funds to grow even more for the betterment of your kids, you can invest in an ULIP plan. The child plans offer various investment options, making them a very suitable financial product for protecting the financial future of your children.
The bottom line
As you can clearly see from the points mentioned above, having an insurance plan for child is totally worth it. All the top Indian insurance providers offer child plans and you can find a suitable policy for yourself with ease. So what are you waiting for? Log on, run a quick comparison and find a child plan that will wholesomely benefit you and your kids for a very long time.